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Finland Investment Guide


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A guide to doing cost-effective business in Finland. Research, development and innovation. Industrial and business Sectors. Competent clusters. Investment incentives. Setting up a business in Finland. Employment and Labour Market. Visas, work and residence permits. Corporate law.

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Finland Investment Guide

  1. 1. Finland Fact Book A guide to doing cost-effective business in Finland
  2. 2. Welcome to Finland DEAR READER Finland is an economically and politically stable society and has been a member of the European Union since 1995. The Finnish economy is knowledge-based and strong on innovation. The longstanding national investments in innovation and a forward-looking technology policy have produced world class expertise in many sectors of the Finnish economy. For many years Finland has also been among the top countries globally in terms of R&D spending per capita. Finland has several high-tech clusters with many technology companies that have cutting-edge expertise. Finland’s particular strengths include Information & Communication Technology (ICT), Cleantech, Renewable Energy, Health Care and the Pharmaceutical, Bio and Medical Industries, as well as the Mining, Forest and Chemical Industries. Thanks to the close cooperation between business and the institutes of higher learning, companies can benefit directly from the academic excellence of the Finnish universities. Finland welcomes international companies and entrepreneurs to explore the various business opportunities and excellent infrastructure that our country can offer. All companies registered in Finland enjoy the same benefits, grants and access to the national technology programs, irrespective of the nationality of the company’s ownership. My Ministry and our national investment promotion agency Invest in Finland are pleased to give you further information and assistance for the successful establishment of your business in Finland. Jan Vapaavuori Minister of Economic Affairs the Ministry of Employment and the Economy 2 Finland Fact Book – A guide to doing cost-effective business in Finland
  3. 3. DEAR READER Invest in Finland is the national investment promotion organisation committed to encouraging FDI and making business grow. We assist foreign companies in their direct investments and build international co-operation on a win-win basis in order to create added value to the national economy and to the industrial, service and logistical structure of the country. We offer our clients an in-depth analysis and consulting on all the different investment alternatives; greenfield investments, an acquisition of an existing Finnish company, joint ventures or R&D Co-operation. The services are tailored to the specific needs of the client and cover every stage of setting up business in Finland, from initial data collection and opportunity analysis to the actual business launch. The client company is also shown how it can access the investment incentives offered by the Finnish government and regional bodies, and how to benefit from the world-leading research collaboration between Finnish universities and the private sector. With this investment guide Invest in Finland invites you to explore Finland’s excellent business opportunities. Tuomo Airaksinen Executive Vice President Invest in Finland Finland Fact Book – A guide to doing cost-effective business in Finland 3
  4. 4. Contents 2 Welcome to Finland 5 Why Finland? 6 The Finland Experience 10 12 Research, Development & Innovation 14 Principal Industrial and Business Sectors 20 Business Environment 24 Competence Clusters 26 Investment Incentives 28 Setting up a Business in Finland 31 Employment and the Labour Market 34 Visas, Work and Residence Permits 36 Legal Framework – Corporate Law 37 4 Business Outlook Taxation Finland Fact Book – A guide to doing cost-effective business in Finland
  5. 5. Why Finland? Bangkok Tokyo 9 h 45 min Beijing 7 h 40 min Berlin 2h Seoul Brussels 2 h 40 min Beijing Shanghai Copenhagen 1 h 40 min Frankfurt 2 h 35 min Hong Kong 9 h 50 min London 3 h 05 min New York Hong Kong Moscow Helsinki Stockholm St. Petersburg Copenhagen Moscow London Brussels Berlin Paris Frankfurt 1 h 40 min New York 8 h 40 min Paris 3 h 05 min Seoul 8 h 50 min Shanghai 9 h 05 min St. Petersburg Bangkok 1 h 10 min Stockholm How can a nation of five million consistently top numerous international surveys? In Finland, you have a dynamic business environment where everything works. Thanks to its early adoption of information technology, unique co-operation between educational and research institutions and industry, as well as a skilled workforce receptive to new technologies, Finland is an ideal test bed for new solutions and technologies. Couple this with a sophisticated infrastructure, highly competitive operating costs and strategic location in Northern Europe, and you have a market that offers great opportunities for success and solid growth. Non-existent corruption and minimal red tape are additional reasons for establishing a business in Finland. It is our experience that foreign companies locate in Finland for the long-term and enjoy high return on investment. Today, foreign-owned companies account for more than 20 % of corporate turnover in Finland, and their number is constantly growing. AN INCENTIVE DESTINATION FOR BUSINESS TRAVEL You will, of course, find the best hotels, fine dining, international events and venues, and modern meeting and convention facilities across the scale. That is to be expected of an area that especially welcomes business visitors. What you will not find elsewhere is the unique combination of adventure and soothing silence, in one of the purest natural settings in the world. Winter or summer, there are plenty of new and stimulating experiences to be gained. We like to think of them as making business a pleasure. Finland Fact Book – A guide to doing cost-effective business in Finland 55 min Tokyo 9 h 40 min Singapore Mumbai 11 h 45 min • The third most competitive economy in the world, WEF Global Competitiveness Report 2012–2013 • The best in the Health and primary education pillar, WEF 2012–2013 • The best in Higher education and training pillar, WEF 2012–2013 • The second most innovative country, WEF 2012–2013 • Best availability of qualified engineers in the world, IMD World Competitiveness Yearbook 2013 • Number three globally in business expenditure on R&D, as percentage of GDP, IMD 2013 • Number six in knowledge transfer between universities and companies, IMD 2013 • The least corrupted country in the world along with Denmark and New Zealand, Transparency International 2012 • Top in the OECD’s PISA study of learning skills among 15-year-olds, PISA 2009 • The only Eurozone country in Northern Europe • Strategic geographic position in the expanding markets of Northern Europe 5
  6. 6. The Finland Experience The Finnish economy is an open and highly developed one. The World Economic Forum ranks it the third most competitive economy in the world (Global Competitiveness Index 2012-2013). Finland has an excellent business environment which is very conducive to foreign investment. Gross Domestic Product grew well from mid-1990 onwards (Finland joined in the EU in May 1995) till the second half of 2008, when the almost world-wide financial crisis erupted. Companies had to adjust and adapt to new circumstances. The economy is still having difficulties but will grow again in 2014 according to forecasts made by various organizations. Facts about Finland Total area Neighboring countries Natural resources Distances Time Population Population density Life expectancy at birth Main towns Languages People in religious communities 338,435 km2 of which 89.8 % land and 10.2 % internal waters on the 1st of Jan 2013. Of the land area 77 % was forests and other woodland and 9 % agricultural land on the 1st of Jan 2011 Sweden, Norway, Russia (1,269 km, Finland’s land border with Russia is the eastern border of the European Union), Estonia Forests, copper, iron ore, other minerals, fresh water 1,160 km from north to south, 540 km from west to east UTC +2 hours during winter, UTC + 3 hours during summer 5.44 million in June 2013; two thirds live in towns or urban areas, one third in rural areas 17.86 inhabitants per square kilometre on the 1st of Jan 2013 Females 83.5 years, males 77.2 years in 2011 Helsinki 603 968, Espoo 256 824, Tampere 217 421, Vantaa 205 312, Oulu 190 847, Turku 180 225 people at the end of 2012 Finnish 89.7 %, Swedish 5.4 %, Sami 0.04 %, Russian 1.1 %, Estonian 0.7 %. Finnish and Swedish are the official languages. Lutheran 77.3 %, Orthodox 1.1%, Catholic 0.2 %, Islamic congregations 0.2 % (20.1 % have no religious affiliation) As the home of Nokia, Finland has established a reputation for innovative high-tech industries. The country’s infrastructure is well developed and workforce highly educated and skilled. According to WEF, Finland has the best education system in the world and according to IMD the best availability of qualified engineers in the world. Finland also welcomes foreign workers because several industry sectors are facing labour shortages due to ageing population. 6 Finland Fact Book – A guide to doing cost-effective business in Finland
  7. 7. THE FINNISH ECONOMY Main economic indicators, Finland GDP (change, %) Private consumption (change, %) Government consumption (change, %) Gross fixed capital formation (change, %) Exports of goods and services (change, %) Imports of goods and services (change, %) Current account (% of GDP) Consumer prices, average (change, %), EU harmonized Unemployment rate (%) 2006 2007 2008 2009 2010 2011 2012 4.4 5.3 0.3 –8.5 3.4 2.7 –0.8 4.3 3.5 1.9 –2.9 3.3 2.6 0.2 0.4 1.1 1.9 1.1 –0.4 0.5 0.6 1.9 10.7 –0.6 –13.2 1.6 5.7 –1.0 12.2 8.2 5.8 –21.3 7.9 2.7 –0.2 7.9 7.0 7.5 –17.2 6.8 6.2 –1.0 4.2 4.3 2.6 1.8 1.5 –1.6 –1.9 Gross Domestic product, Finland GDP (at current prices, € billion) 200 190 180 170 160 1.3 7.7 1.6 6.9 3.9 6.4 1.6 8.2 1.7 8.4 3.3 7.8 3.2 7.7 2008 2009 2010 2011 2012 Sources: Statistics Finland Sources: Statistics Finland, Bank of Finland GDP per capita Finland Finland has become the base for a number of foreign companies taking advantage GDP per capita (at current prices, €) of the highly educated employees and their work ethic. Although the high-tech sec- 36000 tor is the best known globally, Finland has also managed to thrive with traditional 35000 industries such as forestry and metals. Companies are also investing heavily in new 34000 industries such as bio-fuels. 33000 32000 Gross domestic product at basic prices in 2012 31000 30000 Industry Primary production Secondary production Services Share of the GDP, % 2.5 41.8 55.7 Source: Statistics Finland 2008 2009 2010 2011 2012 Sources: Statistics Finland GDP per capita in Finland, Sweden, Denmark, Estonia GDP per capita (at current prices USD, PPP) 50000 40000 30000 20000 10000 0 2008 2009 2010 2011 2012 Sources: OECD iLibrary database Denmark Sweden Finland Estonia Finland Fact Book – A guide to doing cost-effective business in Finland 7
  8. 8. Despite high birth rates, women are actively in work life. Thanks to public childcare services and a legal right to work shorter days, women can have a career without compromising family life. POPULATION AND WORKFORCE The population of Finland is 5.4 million and growing. In 2012, 59 493 babies were born alive in Finland. The total workforce in Finland was 2.69 million of which 51.7 % were men and 48.3 % women. English is the common business language among Finland’s highly international business community and also the most popular foreign language in the country. About 90 % of Finns under thirty speak English. There is instruction available in the major European languages in the main cities for expatriate families who wish to continue their children’s education in their own language. THE BUSINESS HUB OF NORTHERN EUROPE Finland shares borders with Russia, Sweden and Norway, as well as Estonia across the Gulf of Finland. The long border with Russia is also the eastern border of the European Union. Finland has long-established connections and experience of doing business with Russia, the Nordic and the Baltic countries. A STABLE POLITICAL SYSTEM BOOSTS THE ECONOMY Finland is a republic and became independent in 1917. The current head of state is President Mr Sauli Niinistö who was elected in early 2012. The single chamber parliament has 200 members and is elected for a four-year term by direct popular vote under a system of proportional representation. Finland’s multi-party democracy is characterized by consensus and pragmatic policies imple- mented by coalition governments. Finland is known for its active role in the international community and has played a major role as a bridge between the East and the West. Former president Mr Martti Ahtisaari was awarded the Nobel Peace Prize in 2008, and Finnish soldiers participate in peacekeeping missions around the world. 8 Finland Fact Book – A guide to doing cost-effective business in Finland
  9. 9. GEOGRAPHY, NATURAL RESOURCES AND CLIMATE Finland is a country of forests, lakes and islands. Areas of exceptional natural beauty include Lapland in the north, the Lakeland region in eastern Finland and the archipelago along the south-western coast. It is Europe’s largest archipelago, and also Finland is strategically located to serve a market area of 80 million consumers in Northern Europe. includes the semi-autonomous province of Åland (Ahvenanmaa). Inland, there are 187,888 lakes dotted with islands. Space and a rare tranquility are some of Finland’s greatest assets. Finns like to call their forests Green Gold because they are its most important natural resource. Other resources include peat, fresh water resources and minerals, for example iron ore, copper, lead, zinc, chromite, nickel, cobalt, gold, silver, phosphate, limestone, talc, quartz and uranium. Finland’s climate has four distinct seasons. The summers are usually fairly warm Finland has consistently been ranked as one of the least corrupt countries in the world. with temperatures rising above +20 degrees Celsius. In Lapland, the sun does not set during the summer months. Finnish winters can be cold and temperatures below –20 degrees are not uncommon. The mean temperature in Helsinki in July is +17 degrees and –5.7 degrees in February. More information in English at Statistics Finland: • Virtual Finland: • Research Institute of the Finnish Economy: Age distribution of the population Age distribution of the workforce 65-74 years 2% 65 and over 18 % Finland has been ranked at the top of the WEF’s Environmental Sustainability Index since 2000. 0–24 years 29 % 15–24 years 16 % 55–64 years 17 % 50–64 years 21 % 25–49 years 32 % 25–54 years 65 % Sources: Statistics Finland Sources: Statistics Finland Finland Fact Book – A guide to doing cost-effective business in Finland 9
  10. 10. Business Outlook Fitch Ratings, the international rating agency, affirmed 2 May 2013 the long-term credit ratings of ‘AAA’ for the Republic of Finland. Finland also has the best possible rating from Moody’s (Aaa) and Standard & Poor’s (AAA). Fitch says Finland’s rating outlook is stable. ECONOMY IN 2012–2014 Finland’s GDP amounted to 192.54 billion EUR in 2012. The Ministry of Finance has forecasted that the GDP will decrease slightly in 2013 due to difficulties in Europe but will increase again in 2014 (+1.2 %) and 2015 (+1.9). The export of goods and services is forecasted to grow 3.7 % and 4.2 % in the following two years. The import of goods and services should grow almost as fast as export. Finland’s economy is firmly integrated into the global economy, and foreign trade plays an important part. According to Customs Finland, Finland’s exports of goods amounted to 56.88 billion EUR in 2012. Merchandise exports made up 29.5 % of Finland’s GDP. The major export groups were basic manufactures (e.g. wood products and metals); machinery, equipment and transport equipment; chemicals and related products; and mineral fuels. The value of Finland’s imports of goods was 59.48 billion EUR in 2012. The main import product groups were machinery, equipment and transport equipment (16.11 billion EUR) and mineral fuels (12.99 billion EUR). In 2012, other EU member countries accounted for 53.6 % of Finnish exports of goods and 53.0 % of imports of goods. Finland’s major export partners were Sweden (11.1 %), Russia (10.2 %), Germany (9.2 %), the United States (6.3 %) and the Netherlands (6.3 %). GOVERNMENT POLICY IN A KNOWLEDGE-BASED ECONOMY The government of Finland views entrepreneurial activity as the bedrock of Finland’s competitiveness and is committed to providing companies with the world’s best operating environment. Finland’s economic policy aims at improving productivity through the utilization of new ideas, the creation and rapid adoption of new technology, a highly skilled workforce and the intelligent organization of work. A knowledge-based competitive edge is seen as the result of a more diversified array of skills – in science, technology, business, service solutions, design, branding or ways of organizing work and production. One of the key long-term factors contributing to the success of the Finnish economy has been the constructive partnership between the government, employers and trade unions. The Finnish system has produced a level of political stability and economic continuity undreamt of in most countries. FOREIGN DIRECT INVESTMENT (FDI) IN FINLAND As one of the most competitive and open economies in the world, Finland has a great deal to offer foreign investors and also much to gain from foreign direct investment (FDI). Statistics show that most foreign-owned companies actually grow faster and perform better than the local companies after establishing themselves in the Finnish market. On average, about 200 foreign companies locate in Finland every year. Their main reasons for coming Finland are access to the Finnish and surrounding markets of 10 Finland Fact Book – A guide to doing cost-effective business in Finland
  11. 11. 80 million people, as well as the country’s world-class expertise and technology. Other important reasons include safety, the clean environment, and the small scale of bureaucracy and corruption. Finland’s modern infrastructure, logistics and communications networks are also attractive to many companies. Many companies that invest in Finland use it as a base to also manage their business in the Nordic countries, the Baltic region and Russia. Finland is the ideal business gateway to Russia and a significant share of the transit trade from the EU to Russia passes through Finland. Finland’s historical trade and cultural ties to the neighbouring countries provide valuable insights for foreign companies. Finland offers the fastest and least congested air route from Northern Europe to Asia. Foreign direct investment (FDI) in Finland is often related to knowledge-driven investments. José Manuel Barroso, President of the European Commission, has stated that “Finland has created wealth not through easy money, not with casino money, but with work, discipline and ideas.” Finland has several high-tech clusters with many small technology companies that have cutting-edge expertise but lack capital and have limited access to the global markets. These include companies specializing in wireless and mobile solutions, health care and life sciences, and new materials and processes. Connecting these companies with the right foreign investors results in a win-win situation for everyone. Finnish companies also have extensive know-how in the Cleantech sector, including biomass-powered energy technologies, combined heat and power production, and power plant automation. Finland is one of the industrialized world’s leading users of bioenergy and a developer of combustion technologies and effective fuel chains. Wind energy is another growth sector with good potential for a high return on investment. Finland has introduced a feed-in tariff system and funding which are intended to attract major investments into the wind energy sector. One of the sectors which is expected grow markedly in the future is Business Services. In 2006 Business Services made up 7.7 % of the GDP but in 2010 the figure was already 14.5 %. This trend is expected to continue as outsourcing is gaining ground and economic activities are diversified. In the public sector many municipalities are merging and also looking for new outsourcing possibilities. OECD statistics show that Finland’s labour productivity per hour worked has increased quite fast in manufacturing and whole industry (includes also mining and quarrying and utilities) since 1995. Salary level in the whole economy is lower in Finland than in the other Nordic countries. FDI IN 2012 In 2012, 153 new foreign companies established themselves in the Finnish market. Of these, 98 companies entered Finland through business acquisitions. The most popular sectors were ICT, business services, healthcare and wellbeing, retail trade and cleantech. As in previous years, the major investors in Finland came from Great Britain, Sweden and the United States in 2012. Great Britain overtook Sweden which has been the biggest investor into Finland for many years. Most investments were made in business services, the healthcare and wellbeing sector, retail trade, environmental technology and the ICT sector. Most foreign companies locate themselves in the Helsinki metropolitan area. Finland Fact Book – A guide to doing cost-effective business in Finland 11
  12. 12. Research, Development & Innovation (Statistics Finland 2012) VTT Technical Research Centre of Finland is a non-profit-making research organization established in 1942. VTT is the largest multitechnological applied organization in Northern Europe. It provides high-end technology solutions and innovation services. Striving to improve its clients’ competitiveness and competence, VTT combines different technologies, creates new innovations and a substantial range of world-class technologies and applied research services. VTT uses its extensive international scientific and technology network to produce information, upgrade technology knowledge and create business intelligence and value added to its stakeholders. VTT’s over 1500 customers are both domestic and foreign companies as well as public organizations in Finland and abroad. VTT employs over 2800 people. VTT has published c. 50,000 books, articles, reports and presentations since 1943. At the end of 2012, VTT had 1,290 patents and patent applications in its portfolio. Expertise and innovations play an increasingly important role in Finland’s future strategy. Innovation refers to competence-based competitive advantage that can emerge from scientific research, technology, business models, service solutions, design, brands or methods of organizing work and production. Capitalized as innovations, competence-based competitive advantages promote the advancement of businesses, society and wellbeing. This is why innovation is an integral part of the R&D process. Finland ranks well in international comparisons concerning technological and scientific infrastructure. Selected IMD World Competitiveness Yearbook 2013 rankings Sub-factor Availability of information technology skills Availability of qualified engineers Technological co-operation between companies Development and application of technology is supported by the legal environment Availability of funding for technological development Total expenditure on R&D, % of GDP in 2011 Business expenditure on R&D, % of GDP in 2011 Intellectual property rights are adequately enforced Knowledge transfer is highly developed between companies and universities Finland’s ranking 3 1 2 3 3 2 3 6 6 Competitiveness and R&D Intensity in European countries Luxembourg EUROPEAN COMPETITIVENESS INDEX 2006-2007 80 817 people worked in research and development in Finland in 2011. They are divided between companies, public sector, nonprofit organizations and the university sector. Of the total, 34 790 people worked in Helsinki. Finland Norway Denmark Netherlands UK France Ireland Belgium Germany Switzerland Sweden Italy Spain Greece Portugal Hungary Slovak Republic Czech Republic Poland R 2 = 0,52 R&D INTENSITY (% of GDP) More information in English: 12 Sources: Finland Fact Book – A guide to doing cost-effective business in Finland
  13. 13. Businesses in the Helsinki region invest over 40 % of all investment in research and product development by Finnish companies. Businesses and the institutions of higher education work closely together in R&D: 70% of companies with R&D activities cooperate with universities and universities of applied sciences. The central government will spend 2.0 billion EUR in R&D funding in 2013. This sum will be an estimated 1 % of gross domestic product which is a high level internationally. R&D INTENSITY AND COMPETITIVENESS Finland has a long history of investing in research and education. These investments give Finland a competitive advantage. The relationship between R&D intensity and competitiveness factors is very strong: Finland is the second most competitive country in Europe and the second most innovative country in Europe according to WEF (The Global Competitiveness Report 2012-2013). PATENTS Finland has a high number of patent applications in relation to the country’s population 5.4 million. It has more resident patent filings per million people than some of the other Nordic countries such as Sweden, Denmark, and Estonia. Patent application by residents and patents granted to residents in Finland, Sweden, Denmark and Estonia in 2011 Finland 3,221 1,305 Patent applications Patents granted Sweden 5,614 2,332 Denmark 3,372 665 Estonia 95 38 Tekes (the Finnish Funding Agency for Technology and Innovation) is the main government financing and expert organization for research and technological development in Finland, founded in 1983. Tekes finances industrial R&D projects as well as projects in universities, polytechnics and research institutes. It focuses especially on challenging, innovative and risk-intensive projects. Tekes employs c. 400 people. Along its Helsinki-based headquarters Tekes has 15 so-called regional Centres for Economic Development, Transport and the Environment (ELY Centres) throughout Finland and eight offices abroad in Beijing, Brussels, Moscow, New Delhi, Palo Alto, Shanghai, St. Petersburg, and Washington D.C. Tekes funds its target projects through low-interest loans or grants, depending on the stage of the innovation and the nature of the proposed project. Tekes also awards financing to foreign owned companies registered in Finland. Foreign companies with R&D activity in Finland are not required to have a Finnish partner to be eligible for funding. The financed project should, however, contribute to the Finnish economy. Source: WIPO In 2012, Tekes funding for companies and research organizations amounted to 570 million EUR. The number of projects funded was 1640. Master’s degrees granted by Finnish universities in 2012 Administration and commerce sector More information in English: 3995 Humanities and education 3864 Technology and transport sector 2419 Renewable natural resources sector 1715 Health and social services sector 1306 Culture 531 All fields of education 13830 0 4000 8000 12000 16000 Source: Statistics Finland Finland Fact Book – A guide to doing cost-effective business in Finland 13
  14. 14. Principal Industrial and Business Sectors Finland has developed world-class expertise in sectors like cleantech, forestry, metal and machinery manufacturing, ICT industry and services, and health and wellbeing. International investors and companies can benefit from the clusters and centres of expertise in these business sectors that aim to maximize the benefits of research, networking and international cooperation. In the 1950s the Finnish economy was still largely based on primary production and an agrarian workforce. Today Finland is leading or near the top of most international comparisons in terms of growth and development in the economic, technological and social spheres. According to The Research Institute of the Finnish Economy, the system has combined economic efficiency and growth with a peaceful labour market, an egalitarian distribution of income and social cohesion, backed up by a generous social security system. The largest sector of the Finnish economy is Services at 55.7 per cent (share of total output at basic prices in 2012), followed by secondary production (mining, and quarrying, manufacturing, utilities and construction) at 41.8 per cent. Primary production is at 2.5 %. Finland’s main industrial products are paper and board, metal products, machinery and equipment and electro-technical products. TECHNOLOGY INDUSTRIES Technology industries are the largest manufacturing cluster in Finland. The cluster covers five sectors: Metal Industry, Electronics and the electro-technical industry; Mechanical engineering; Information technology industries; and Consulting engineering and architectural services. Technology industries account for 60 % of total Finnish exports and 80 % of Finnish R&D investments. The five sectors employ directly 290,000 people, and the total employment effect is c. 700,000 which is a quarter of the workforce. Several companies in this cluster are Finland’s leading exporters and internationally recognized as innovation pioneers. Finnish metal processing is well known for its efficient utilization of energy and raw materials, and holds world-leading positions in a number of processes. More than half the world’s copper and a third of all nickel is manufactured using the flame melting technology developed by Finns. State-of-the-art cruise ships are built in Finland’s shipyards. Finnish companies engaged in electronics and electro-technical activities generate innovative solutions which are employed in production processes all over the world, from underground trains to wind power plants, from space technology to sports and medicine. More information in English at the Federation of Finnish Technology Industries: 14 Finland Fact Book – A guide to doing cost-effective business in Finland
  15. 15. Output at basic prices in 2012 Sector Metal industry (in the widest sense of the term) NACE 24–30+33 Metal industry excluding manufacture of electrical and electronic products NACE 24+25+28+29+30+33 Manufacture of basic metals and fabricated metal products NACE 24+25 Manufacture of electrical and electronic products NACE 26+27 Manufacture of machinery and equipment not elsewhere classified NACE 28 Manufacture of transport equipment NACE 29+30 Repair and installation of machinery and equipment NACE 33 Million EUR 53 714 37 393 16 690 16 321 14 747 2 871 3 085 Source: Statistics Finland CHEMICAL INDUSTRY The chemical industry is Finland’s second largest manufacturing sector if the manufacture of basic metals & fabricated metal products and machinery and equipment are grouped together and not treated separately. The range of products manufactured is huge, with most of them being used in other industries, especially forestry and agriculture. Products include plastics, paints, oil products, pharmaceuticals, environmental products and petrochemicals. Output at basic prices in 2012 Sector Chemical industry, total — Manufacture of coke and refined petroleum products – Manufacture of chemicals and chemical products – Pharmaceutical industry – Manufacture of rubber and plastic products In the musical instruments industry, Million EUR 24 202 11 653 7 659 1 600 3 290 exotic tonewoods such as ebony, widely used in everything from acoustic guitars to clarinets, are increasingly difficult to source. Finnish guitar maker Flaxwood uses Source: Statistics Finland patented technology to produce musical instruments or instrument FOREST INDUSTRY components by mould-injecting The value of production of forest industry was 18.81 billion EUR (at basic prices) in organic fiber-composite materials 2012. Of this total, pulp, paper and paperboard industry formed 13.33 billion EUR using spruce or other sustainably and wood products industry 5.48 billion EUR. When the manufacture of furniture is harvested woods. The results rival included, the value of production amounted to 19.96 billion EUR which was 5.2 % of in-struments produced using the very Finland’s total production. finest exotic hardwoods. Flaxwood’s own line of guitars has proven the A total of 10.7 million tonnes of paper and paperboard were produced in Finland in viability of the technology, having 2012. Of this, the share of graphic paper, i.e. printing, writing and newsprint grades garnered recognition at the highest was some 6.6 million tonnes. Graphic paper accounts for about 65% of the Finnish level among musicians, and in the paper industry’s overall production. Production of paperboard grades for packag- music industry press. Flaxwood’s ing purposes came to 2.8 million tonnes, a little over a per cent more than in 2011. guitars were recently awarded the Paperboard production volumes showed clears signs of buoyancy in the final quarter prestigious “Premier Guitar Gear of 2012, and this pushed the overall annual production volume into positive territory Award”. Finland Fact Book – A guide to doing cost-effective business in Finland 15
  16. 16. and past the previous year’s total. Some 6.8 million tonnes of pulp were produced in 2012, up 1.2 % from 2011. (Source: Finnish Forest Industries Federation) The Finnish forest cluster covers, beside paper and wood product and furniture industries, also forestry entrepreneurs, logistics companies, machinery and equipment manufacturers, energy producers, chemicals manufacturers, related research institutions, universities and consultancies, packaging industry, and the wood-based construction industry. This forest cluster is based on significant forest resources and is highly developed. In addition to the traditional products like newspapers, books, packaging and furniture, wood and its constituents are also used to manufacture sweeteners for chewing gum and a cholesterol-lowering additive for margarine spreads, for example. Other possibilities include the addition of ’smart’ components or nanotechnology to woodfibre-based products, creating entirely new kinds of product opportunities for the forest industry. CLEANTECH Finnish cleantech companies offer advanced environmental technologies that can succeed in global markets and provide a significant return on investment. The cleantech business is forecasted to grow fast almost worldwide in the next years and Finland is considered one of the most progressive countries in the world in terms of its cleantech expertise and associated technologies. This know-how provides international companies with excellent opportunities to benefit from innovative environmental technology companies, solutions, products and services. These include, for example, technologies that combine waste management and energy production, distributed energy production, and products and industry-specific technologies that can be seamlessly integrated into large-scale environmental projects. The global demand for cleaner technology, energy and processes is constantly increasing. Finland’s innovative and fast-growing cleantech sector now includes about 2,000 enterprises and the national objective is to develop the sector into a new cornerstone industry. The Finnish cleantech cluster comprises four Centres of Expertise, more than 400 companies as well as universities and research centres. Various public and private actors invest significant sums of money in research and development in the Cleantech sector. Each Centre of Expertise specializes in different aspects of cleantech and strives to promote the growth and internationalization of the associated businesses. They collaborate with each other, with Centres of Expertise of the Energy Technology Cluster and network with local businesses and academia. For international companies the Cleantech cluster also represents a useful gateway for finding partners in Finland. More information in English at: In 2010, the Finnish Cleantech cluster was ranked among the world’s top three Green Tech Clusters by the Cleantech Group. 16 Finland Fact Book – A guide to doing cost-effective business in Finland
  17. 17. BIOTECHNOLOGY Finland is ranked among the top 10 countries worldwide for biomedical science and clinical medicine, and biotechnology is one of the most promising high-tech industries in the country. The Finland’s pharmaceutical market was worth 2 billion EUR (wholesale value) in 2011 and is closely integrated into the global industry through ownership arrangements. Finland’s domestic market offers an excellent platform from which to launch and develop innovative healthcare products. Finland is also a global leader in the development of new niche applications based on biotech innovations, such as biomedicals, gene technology and molecular biology, human genetics, implants, biomaterials, drug discovery, diagnostics and drug delivery devices. Finnish pharmaceutical and biotech companies are continuously looking to develop international partnerships. This includes overseas companies or corporate venturing units for strategic investment or research cooperation. For example, biopharmaceutical companies such as Biotie Therapies Corp and Hormos Medical Corp. are aiming to launch spearhead products globally through partnerships with international pharmaceutical companies. Finland offers a range of possible biotechnology cooperation partners with different profiles. These include innovative start-ups with skilful, devoted employees and potential patents for further development. There are also established drug discovery companies and biotechnology companies interested in forming strategic partnerships to develop and launch new therapeutic methods and products. Finally, there are interesting merger and acquisition candidates specializing in a particular diagnostic/therapeutic field. There is a healthy level of funding and resources available to overseas pharma/ biotech investors and companies interested in establishing a presence in Finland or developing ties to Finnish R&D networks. The major funding organizations are Tekes – the National Technology Agency, the Academy of Finland, Sitra, Finnvera, and the network of regional Technology Centres and The Centres for Economic Development, Transport and the Environment. Many Finnish bio-products – such as drugs, enzymes and diagnostic tests – have already been successful in the global marketplace. For example, Orion Pharma, the largest pharmaceutical company in Finland, is behind Precedex, a popular pain-relieving tranquillizer used in intensive care. Leiras (today owned by Schering) has also developed the polymer-based Delvivo drug delivery technology for the hormonal contraceptive Mirena. MINING INDUSTRY FINLAND – A MINING FRIENDLY COUNTRY Finland has excellent geological databases, good infrastructure and readily available exploration services. These factors make operations in Finland attractive and costeffective. Finland Fact Book – A guide to doing cost-effective business in Finland 17
  18. 18. In October 2008, Resource Stocks magazine ranked ’Finland as the safest place to spend exploration dollars. The mining and minerals industry is very important to the country, and plays an increasing role in the economy, both domestically and outside Finland.’ Finland offers the exploration industry a favourable investment and operating environment, with significant potential for new discoveries as many commodities are still highly under-explored. Present activity is concentrated on gold, platinum group metals, base metals, diamonds and industrial minerals. Finland has an excellent geological database, good infrastructure and readily-available exploration services. Finland has a long history of mining activity, and Finnish metallurgical technology and manufacturers of mining equipment are well known throughout the international mining community. The exploitation of copper, nickel, cobalt, zinc and lead ores as well as chromium, vanadium and iron deposits has provided the raw material base for the country’s metal industry. The major industrial minerals mined in Finland are carbonates, apatite and talc. • Mining history dates back to 1540 when iron ore mining commenced • There were 12 metal ore mines and 31 industrial mineral mines or quarries in Finland in the summer of 2012 • The total number of mines and quarries was 52 in 2011 when industrial stone quarries and gemstone quarries were included. • Main commodities have been: Cu, Ni, Zn, Co, Cr, Fe, V • Industrial mineral operations include limestone, apatite, talc, quartz, feldspar and wollastonite • Well established mineral processing and refining plants exist for Cu, Ni, Zn, Co, Cr & Fe ores as well as for phosphorus fertilizers, titanium pigments & coating carbonates • The value of production of mining and quarrying was 2.18 billion EUR at basic prices in 2012. Mining of metal ores had a production value of 865 million EUR, other mining and quarrying 1.24 billion EUR and mining support service activities 75 million EUR. TRADE AND SERVICES There are many opportunities for international investors and companies in Finland’s Trade and Services sectors which have grown strongly in the last few years. Finland is also a cost-effective business location to serve surrounding markets in Russia and the Baltic countries. The Finnish property market continues to deliver a stable return on investment. There is also a growing demand for service producers due to increasing outsourcing in both the public and private sectors. Facility services like catering and security services are growing fast, creating opportunities for international companies. The large neighbouring market area, especially Russia, offers additional business opportunities. 18 Finland Fact Book – A guide to doing cost-effective business in Finland
  19. 19. Finland’s central location in Northern Europe, combined with its modern infrastructure and logistical connections, present excellent opportunities for international logistics companies. Finland also offers a working border crossing with Russia and the fastest and least congested transport channel from Europe to Russia, China, Korea and Japan. Finland’s Travel and Tourism sector offers a dynamic business climate, a clean and unique environment with four distinct seasons, and a society that is both safe and internationalized. The number of foreign visitors in Finland has increased significantly during recent years. According to forecasts by the World Travel Tourism Council (WTTC), the total demand for travel in Finland will grow by 33.7 % between 2006 and 2016. ICT Finland is a highly advanced information society. Finnish companies have excelled in innovating and developing ICT products and services. Finland has much to offer international investors and companies in the ICT sector, including first-rate availability of talented and qualified ICT engineers, and easy access to public R&D funding and development networks. Finland has strong domestic demand for ICT products and services, and there are also profitable opportunities in Russia and the Baltic countries. Predictably, Finland has a very strong mobile cluster driven by Nokia. Other ICT clusters in Finland include Digibusiness, Ubiquitous Computing and the Nanotechnology Cluster. More information in English at TIEKE Finnish Information Society Nokia has driven the development for a uniquely strong mobile technology cluster in Development Centre: Finland. The Finns love new gadgets and many services and technologies have been introduced in Finland much earlier than in other countries. International companies More information in English at Tekes: like Siemens and Hewlett Packard use Finland as a test laboratory for experimental • The Academy of launches of new products and services. Google has constructed its most eco- Finland: • Sitra: efficient data centre on the Finnish coast. • Finnvera: • Finpro: • VTT: • Visit Applications are also being developed for ubiquitous computing, health care and the Finland: elderly, bio- and nanotechnology, security and environmental purposes. HI-TECH FINLAND To spark the imagination of international investors and companies, HighTech Finland More information in English at HighTech is profiling a broad cross-section of work by Finnish companies and researchers Finland: in areas ranging from mobile communications and sustainable energy to environmental technologies, new types of health care, advanced industrial processes and materials, and more. Finland Fact Book – A guide to doing cost-effective business in Finland 19
  20. 20. Business Environment WEF has ranked Finland as the sixth best country in the world for trade (The Enabling Trade Index 2012). Finland’s business environment (subindex D) was regarded as the best. Finland’s business environment is characterized by a well-functioning partnership between the public and private sectors. The public institutions that underpin Finland’s economic development are highly ranked in international comparisons. The governmental regulators perform effectively and transparently, and support the private sector to drive the economy forward. Finland’s corruption level is among the lowest in the world and there is a strong respect for the law in both the business world and the society at large. Finland’s security environment is often at the top of the global rankings. The cost of doing business in Finland is competitive and the corporate tax rate is one of the lowest in Europe. Foreign-owned companies have full access to invest- ment incentives and dynamic innovation environment available in Finland. The coun- try’s workforce is highly educated and computer literate, so skills and know-how are readily available. Foreign investors can also draw on the Finns’ expertise in doing business with the neighbouring countries in terms of logistics, cultural knowledge, language skills, and experience in venture capital operations. Science, technology and innovation are nurtured at the highest level of the Finnish government and through the effective framework that brings together companies, universities, research institutes and public funding bodies. Key issues concerning technology are regularly discussed at the Research and Innovation Council, chaired by the Prime Minister. INNOVATION ENVIRONMENT Finland is internationally known for its high level of innovation and technological expertise. Finnish innovations include the text message (SMS), lactose free dairy products, Xylitol tooth friendly sweetener and the Linux computer operating system, to name but a few. Finland is among the top countries globally in terms of R&D spending per capita. Finnish companies and consumers are early adopters of emerging technologies, which makes Finland an ideal test bed for new solutions and technologies. A strong commitment to innovation and R&D by both the private and public sectors has played a crucial role in Finland’s development into one of the leading knowledgebased economies in the world. Finland’s R&D expenditure has consistently been above 3 % of GDP since the turn of the millennium. The number of R&D personnel in Finland was 80,817 in 2011. This was 3 % of all employed people – the share is one of the highest in the world. The number of doctorates has nearly doubled in the last ten years. The Ministry of Employment and the Economy oversees Finland’s technology policy. The key expert and funding organizations in the Finnish innovation environment are Tekes, the Academy of Finland and Sitra (the Finnish Innovation Fund). They run 20 Finland Fact Book – A guide to doing cost-effective business in Finland
  21. 21. technology and research programmes which connect industry and the academia, as well as provide funding for the best scientist and R&D companies in Finland. At the regional level, the technology policy is implemented by the ELY Centres (Centres for Economic Development, Transport and the Environment). Universities and polytechnics form the higher education sector which is exceptionally dense and regionally comprehensive by international comparison. Finland also has 19 governmental research institutes and several science parks, business incubators and technology centres. The knowledge transfer between business and universities is one of the key features of Finland’s economy and innovation policy. TRANSPARENCY AND ANTI-CORRUPTION Corruption is a global problem which exists in all countries and regions. In Nordic countries corruption is less of a problem than in many other countries and one The Finnish government’s innovation policy is an important part of its economic policy. It aims to foster the preconditions for innovation, provide incentives for it, and ensure the viability of the innovation environment. The active dialogue between companies, universities, research institutes and R&D financiers is one of the cornerstones of Finnish innovativeness. significant reason is the solid tradition of transparency in the administration. A report by Transparency International shows that in 2012, Finland was the least corrupted country in the word along with New Zealand and Denmark. The index draws on a number of expert opinion surveys that poll perceptions of public sector corruption. While many countries are perceived to be facing serious domestic corruption, Finland’s high levels of civil service integrity continue to facilitate business and public sector efficiency. The fact that the police force is regarded as the most trusted and reliable organization in the country tells a lot about the low level of corruption in Finnish society. The low level corruption makes doing business in Finland more straightforward than in most places and is one of the attractive features of the country as an investment location. According to the study Combating Corruption – the Finnish experience by the Ministry for Foreign Affairs, there is a combination of reasons that help to prevent corruption in Finland. The first is a popular value base that promotes moderation, personal restraint and the common good. Secondly, Finland has developed well-functioning legislative, judicial and administrative structures that closely monitor and guard against the abuse of power. Thanks to efficient law enforcement, professional crime investigation methods, and modern budgetary, accounting and auditing practices, the likelihood of finding and apprehending the perpetrators of corruption is high. The obligation to provide public argumentation for decisions and public access to official documents also increases transparency and public trust in governance. Finland’s independent media is quick to expose even minor abuses of official functions. Another important factor contributing to the culture of accountability and Finland Fact Book – A guide to doing cost-effective business in Finland 21
  22. 22. preventing the abuse of power is the prominence of women in parliament and high public offices in Finland. Finally, the low income disparities and adequate wages in Finland serve to reduce the propensity to accept bribes. Good wages, in turn, require a strong public economy and a strong corporate sector. TRANSPORT INFRASTRUCTURE Advanced transport infrastructure and logistics are key strengths of Finland’s domestic economy and its lively trade with the Nordic and Baltic countries, the EU, Russia and Asia. Business is served by excellent roads and railways, and a vast network of waterways, canals and sea lanes. As the eastern border of the EU, Finland is the ideal business gateway to Russia. The countries share the same rail gauge, so rail cars do not require modification or reloading when they cross the border. Government-owned Finavia Corporation maintains a network of 25 airports in Finland and the air navigation system covering the entire country. The Helsinki-Vantaa Airport is recognized among the world’s best international airports in IATA and ASQ surveys. Helsinki-Vantaa Airport offers direct connections to 130 destinations across the world and is an increasingly popular gateway to Asia as the fastest route between Northern Europe and Asia. Finland’s highly developed transport and communications infrastructure enables strategic access to the expanding markets of Northern Europe, Russia and Asia. Finland’s fully automated, state-of-the-art ports are highly specialized and rank among the safest and fastest in the world. Car ferries and container ships serve the region with regular daily departures. The newly opened Vuosaari Harbour has been built in a key location for efficient transport connections in a total market area of 80 million consumers. The world’s leading providers of logistical services are represented in Finland. They offer the full range of specialist aircraft, ships and vehicles, and the latest technology for automated warehousing and real-time monitoring of shipments. ENERGY Foreign investors in Finland can depend on a highly reliable and cost-effective power supply to run their business with maximum efficiency. Finland’s power generation, transmission and distribution systems are highly efficient and the price of electricity is among the lowest in Europe. EU Eurostat figures show that in terms of purchasing power, the price of domestic electricity in Finland is the cheapest in the EU countries and about one third lower than the average price in the EU. Finland’s energy policies are focused on energy security, economic development and environmental sustainability. Power generation in Finland is decentralized across more than 400 power stations which use several different production technologies and raw materials. This diversified approach ensures a very stable energy supply and has kept the price of electricity, natural gas, wood and peat at a competitive level. 22 Finland Fact Book – A guide to doing cost-effective business in Finland
  23. 23. In the overall use of renewable energy sources, Finland is one of the leaders in Europe: renewable consumption as a share of gross final energy consumption was 31.8 %, when the EU27-average was 13.0 % in 2011. Still, Finland is committed to further increasing the share of renewables, up to 38 % by 2020. Finland’s energy sector produces a reliable and affordable power supply and is a world leader in the use of bio-energy. To reach the target, investments in bioenergy, wind power and other renewable energy have to be increased. Energy production from solid biomass, biogas and wind power has increased in the last years but the Finnish government has assumed that the share of renewable energy sources in final energy consumption might be “only” 34 % in 2020. FINLAND – LEADER IN BIO ENERGY Finland is one of the industrialized world’s leading users of bio-energy and a developer of combustion technologies and effective fuel chains. The Finnish energy cluster has special expertise in biomass-powered energy technologies, cogeneration (combined heat and power production) and power plant automation. Cogeneration is exceptionally high in Finland, resulting in fewer emissions to the environment. Research and development is constantly carried out into the use of renewable energy resources such as barley ethanol, turnip rape and logging waste. Over 30 % of all the energy consumed in Finland today is produced from renewable raw materials and it is possible to purchase exclusively green electricity generated from environmentally friendly sources. In line with the EU’s energy policy, the Long Term Climate and Energy Strategy adopted by the Finnish Government aims at decreasing energy consumption as well as intense growth in the share of renewable energy sources. Finland Fact Book – A guide to doing cost-effective business in Finland 23
  24. 24. Competence Clusters Finland has 13 competence clusters. Six of them are presented below. CLEANTECH Finnish Cleantech companies are known for their expertise across the whole wood energy value chain and also in water use and treatment, air protection, combined heat and power generation, bioenergy, wind technology, waste management, and urban energy efficiency. With world class expertise and leading companies specializing in environmental technology and renewable energy, Finland is a great source of advanced technologies and best practices, as well as an ideal test laboratory with its demanding Arctic conditions. The Cleantech Cluster has four regional Centres of Expertise and more than 400 enterprises as well as Finland’s leading universities and research centres. Cooperation between the cluster participants has already yielded numerous innovative solutions relating to energy, water, and air quality, for example. A common theme throughout the cluster is environmental monitoring which combines ICT and environmental know-how, and is one of the fastest growing cleantech sectors worldwide. DIGIBUSINESS Finland’s digibusiness cluster has 8000 companies which are developing digital products and services to improve and to enrich everyday life and to increase efficiency in both business and the public sector. Finnish digibusiness companies have expertise in eLearning, multilingual communications and content management, games and entertainment, as well as social media. The Finnish games industry has been growing dramatically during the past ten years to become an integral part of the Finnish content export industry. The digibusiness cluster has six Centres of Expertise, located in Helsinki, Hämeenlinna, Kouvola, Tampere, Turku and Vaasa. Its network also brings together Finland’s biggest universities, research institutes, development organizations and companies. ENERGY TECHNOLOGY Finland is among the leading countries in renewable energy, bioenergy, energy conservation and efficiency, and electricity production through combined heat and power plants (CHP). The Finnish energy technology industry is growing fast. There are seven regional Centres of Expertise which bring together companies and universities with the aim of strengthening competitiveness, creating new business operations, enhancing innovation and facilitating export growth. Finnish companies are involved in the production and refining of biofuels, bioenergy and combustion technologies, heat entrepreneurship, and biogas technology. Finland also has expertise in wind and solar energy and other distributed energy production, and hydrogen technologies. In the field of energy solutions for industry, Finnish companies specialize in energy solutions for the forest industry, material technologies, CHP technologies, future primary energies, and energy markets. Finnish companies also have expertise in distribution and ICT in electrical engineering, intelligent electrical network management, electricity uses and magnetic technology. 24 Finland Fact Book – A guide to doing cost-effective business in Finland
  25. 25. HEALTH AND WELL-BEING In the field of health technology, Finnish companies have expertise in developing accessories, instruments, equipment and systems, as well as diagnostics and sup porting data systems used in health care and medicine. In the area of health and wellbeing services, Finnish companies are working on health, doctor, nursing, social, household management, supplementary and alternative services. Finnish companies are also involved in developing technologies and services for ambient assisted living, improving the capacity of the elderly and others to cope with the challenges of everyday daily life. In the field of sport and fitness businesses, Finnish companies are developing new technologies, concepts and solutions for promoting health and preventing diseases. The health and well-being cluster has four regional Centres of Expertise which are located in Kuopio, Oulu, Tampere and Helsinki. TOURISM AND EXPERIENCE MANAGEMENT Offering unspoiled nature, four distinct seasons and a unique culture, Finland’s tourism and experience management cluster is dedicated to building sustainable destinations and providing meaningful experiences for both business and pleasure. Finland aims to become a top tourism destination in Europe by 2020, providing easy access and premium-quality year-round services. The cluster has five Centres of Expertise based in Rovaniemi, Jyväskylä, Savonlinna, Turku and Helsinki, which support innovation-driven growth and cooperation between research institutes, businesses and the public sector. Key research and development activities include innovations which interlink experience management, electronic business and service design. Innovations are co-created with real users in real life environments through the Experience Lab model. The cluster is committed to an integrated and long-term development and follow-up of the development processes in the Experience Labs for the benefit of the tourism business. UBIQUITOUS COMPUTING Finland – and the Oulu region in particular – is known as a world-class innovation environment offering development, testing and piloting services to companies and research institutions for the construction, commercialization and utilization of wireless data communications, applications and services. Finnish companies have expertise in seamless end use and network convergence, horizontal/vertical integration, wearable technology, RFID and sensor technologies, wireless applications and services, nanotechnology sensors, electrical building services, Ubimedia, multichannel services and applications, and many other areas. The cluster has seven Centres of Expertise located in Jyväskylä, Oulu, Porvoo, Satakunta region, Tampere, Uusimaa region and Varsinais-Suomi region. It creates a strong research foundation and network between research institutions, the public sector and companies in the global frontline of the industry. The Cluster Programme also welcomes transnational cross-cluster collaboration and establishes Living Labs to support the development of user-driven applications and speed up business innovation and product-to-market processes. Finland Fact Book – A guide to doing cost-effective business in Finland 25
  26. 26. Investment Incentives EU funding is largely channeled through the ELY Centres. It is directed to projects developing the competitiveness, knowhow and operating environment of the SME sector, with a special emphasis on start-up businesses and service sector companies. Foreign investors in Finland are eligible for a wide range of government and EU incentives on an equal footing with Finnish-owned companies. Enterprise financing is regulated by international and national laws and statutes. The Ministry of Employment and the Economy (MEE) is responsible, within its purview, for the availability of sufficient financial resources to enterprises with regard to their needs in general and any restrictions imposed by the international financial and legal framework. In addition to taking a legislative role, the MEE is responsible for the management and control of Finnvera plc, a specialist financing company owned by the State, including its subsidiaries, and Finnish Industry Investment Ltd, a stateowned investment company. Furthermore, the MEE controls and manages the regional Centres for Economic Development, Transport and the Environment (ELY Centres) with regard to the subsidies these centres grant to enterprises. Aid to business is aimed at improving the long-term competitiveness and operating environment of enterprises, mainly SMEs. ELY Centres make most of the decisions on aid to business. MEE is involved when the aid sums are substantial. Support for innovative business ventures can also be obtained from the Foundation for Finnish Inventions ( ) and the Finnish Funding Agency for Technology and Innovation If the business is geared towards developing countries, it is possible to obtain a subsidy with the help of the Finnpartnership business-partnership programme. The European Regional Development Fund participates in financing of the development and operating environment projects of enterprises. Loans and guarantees by Finnvera plc: Finnvera improves and diversifies the financing possibilities of companies by providing them with loans, guarantees, venture capital investments and export financing. It grants credit guarantees, loans and guarantees to SMEs in particular. Business development support for investments from ELY Centres: Business development support for investments is a subsidy intended for funding corporate material and immaterial investments. In addition, those 3-year lease expenses of machines and equipment that correspond to the purchase price are acceptable for the funding. Business development subsidy for developmental measures from ELY Centres is a subsidy for the development of a company’s business operations, internationalization, development of products and production methods and other significant development. 26 Finland Fact Book – A guide to doing cost-effective business in Finland
  27. 27. Investment support for businesses from ELY Centres is support intended for funding of the investments of rural micro businesses. Start-up grants granted by Employment and Economic Development Office: Business start-up grants are a form of discretionary support which can be paid to someone starting up as an entrepreneur, and they are available in the initial stages of a business operating on a full-time basis. Transport aid may be granted for deliveries of goods produced to sparsely populated areas like Lapland, Northern Ostrobothnia, Kainuu, Northern Karelia, North Savo and South Savo. Energy subsidies can be granted to companies for investments in energy efficiency and conservation. Research & development funding from Tekes: Tekes offers funding for development projects that are innovative and accelerate the growth of the business significantly. Capital investments from Finnish Industry Investment, a state-owned investment company which makes capital investments in companies during their growth and internationalization phases, as well in acquisition and merger situations. It also invests in foreign companies if the capital is used for business development in Finland. R &D tax break for companies from the State: The Finnish Government is supporting R & D activities by offering companies an additional tax deduction based on the salaries of their R&D personnel during the period 2013-2015. More information: Finnvera: Ministry of Employment and the Economy: ELY Centres: VENTURE CAPITAL Enterprise Finland: Venture capital is available from various private and public sources. The three sources of public venture capital in Finland are: Finnvera: The Finnish private equity firms raised Sitra: new funds worth 467 million EUR in Tekes – Finnish Funding Agency for Technology: 2012. They invested 485 million EUR in domestic and foreign portfolio companies. Of this, 403 million EUR was allocated to so-called buy-out investments. More information on private VC sources at the Finnish Venture Capital Association: Finland Fact Book – A guide to doing cost-effective business in Finland 27
  28. 28. Setting up a Business in Finland Foreign companies are welcome in Finland and the process of establishing a business is quick and easy. The incorporation process usually takes about 2–3 weeks. Types of business. In Finland foreign companies most commonly conduct business through private or public limited liability companies or a Finnish branch office. Business can also be conducted through general or limited partnerships or cooperatives. A foreign organization or foundation can also establish a branch in Finland for business. More information in English on public authorities, trade regulations, and employment issues at Enterprise Finland: SETTING UP A LIMITED COMPANY The European Economic Area (EEA) Foreigner as founder of a limited company. A limited company may be established was established on 1 January 1994 by one or more natural or legal persons (founders). At least one of the founders shall following an agreement between be permanently resident or, if the founder is a legal person, have its domicile in the member states of the European Free European Economic Area - unless the National Board of Patents and Registration Trade Association (EFTA), the Euro- grants an exemption from this rule. The nationality of the founder is thus irrelevant. A pean Community (EC), and all member legal person shall have its domicile in the European Economic Area when it has been states of the European Union (EU). It established in accordance with the laws of a State which belongs to the European allows these EFTA countries to partici- Economic Area and when its registered office, central administration or head office pate in the European single market is in a State belonging to the European Economic Area. A person who is legally without joining the EU. incompetent or declared bankrupt may not act as founder. Permission of the National Board of Patents and Registration to act as founder. If a permit is required, the application, free in form, is to be submitted to the National Board of Patents and Registrations either in Finnish or in Swedish. An application fee (120 EUR) is paid for each decided permit. If permits are applied for three founders of a limited-liability company, three fees are charged (total of 360 EUR). The fee is charged after the decision to grant or to deny the permit has been made. Selecting a business name. A name must be chosen for the company before the formation documents have been completed and the company applies for entry in the Trade Register maintained by the National Board of Patent and Registration. The name must identify the business and be distinct from the business names already in the register. More information in English on registered business names, names pending registration and auxiliary business names at Business Information System: • National Board of Patent and Registration: 28 Finland Fact Book – A guide to doing cost-effective business in Finland
  29. 29. Trade name of a limited company. The trade name of a private limited company must include the words “osakeyhtiö” (limited company) or the corresponding abbreviation “oy” and the trade name of a public limited company shall include the words “julkinen osakeyhtiö” (public limited company) or the corresponding abbreviation “oyj”. Limited companies are divided into private and public companies. Public companies are listed on the stock exchange. Share capital. A private limited company shall have a minimum share capital of 2,500 EUR and a public limited company, 80,000 EUR. The share capital must be paid to the company’s account in full before the company can be entered in the Trade Register maintained by the National Board of Patents and Registration. Registration formalities. New businesses submit the basic declaration to the Trade Register using the start-up notification form. This form can also be used for registration in the Trade Register, Tax Administration, register of VAT liable businesses, register of employers, and the tax prepayment register. For legal purposes, limited liability companies and cooperatives are only established, when they have been entered in the Trade Register maintained by the National Board of Patents and Registration. The registration fee for a private trader is 105 EUR, partnerships 225 EUR, and for a limited company 380 EUR (330 EUR for online notification). A company must register the following documents with the Trade Register within three months of signing the memorandum of association: its articles of association and memorandum, minutes of the board of directors’ meeting (to register the board’s chairman), a directors’ certificate, and an auditor’s certificate. Statutory obligations. In a limited liability company an Ordinary General Meeting must be held in each accounting period, unless otherwise stipulated in the Articles of Association. All registered companies must appoint a professional auditor to audit their annual accounts, except for the smallest companies, which are exempt from this requirement. Companies must submit their annual accounts to the Trade Register. Public companies must prepare and publish interim reports at least four times a year. There are no costs for complying with the reporting requirements. SETTING UP A BRANCH OF A FOREIGN TRADER A branch refers to a part of a foreign organization or foundation that conducts continuous business or professional activities in Finland from a permanent place of business in Finland in the name and on behalf of the foreign organization or foundation. The trade name of a branch of a foreign entrepreneur established in Finland shall contain the trade name of the foreign entrepreneur with a supplement, which indicates that it is a branch – e.g. CDE Cargo Ltd., branch of Finland. A trade name may be registered in two or several languages if the expressions in the different languages correspond to each other in their contents. The notification fee of a branch of a foreign trader is 380 EUR. If the trader opening the branch is from a Finland Fact Book – A guide to doing cost-effective business in Finland 29
  30. 30. THE STAGES OF SETTING UP country outside the European Economic Area (EEA), it will also need a permit from A COMPANY IN FINLAND IN the National Board of Patents and Registration for the establishment of the branch. A NUTSHELL The permit costs 120 EUR. 1. Selection of the form of the enterprise 2. Resolving licensing issues for the business ACQUISITION OF A BUSINESS Finnish law does not impose any restrictions on foreign ownership; foreigners may 3. Arranging finance also acquire Finnish enterprises, their business operations, or become partners 4. As for limited company: in an existing enterprise. The object of acquisition may be, for example, a private Incorporation documents – undertaking; shares in a general or limited partnership; the entire stock of a limited a) Memorandum of association, liability company; or a majority of the shares. You can become a member of an b) Articles of association existing cooperative by paying the participation share. 5. Registration of a new enterprise: It is possible to apply for entry to A large number of transfers of businesses to younger generations are expected in the Finnish Trade Register and Finland in the next few years. According to different estimates, between 60,000 and the records of the Central Tax 80,000 enterprises are going to change hands in the next few years. If no new owner Administration using the same form can be found within the family, an alternative is to sell the business to a third party. 6. Insurance 7. Organization of accounting 30 Finland Fact Book – A guide to doing cost-effective business in Finland
  31. 31. Employment and the Labour Market TRADE UNIONS IN FINLAND An important function of trade unions in Finland is to run unemployment funds which provide earnings-related unemployment benefits. These are typically much higher than the basic unemployment allowance provided by KELA (the Social Insurance Institution of Finland). EMPLOYMENT CONTRACTS In employment contracts and employment relationships, employers must comply with the minimum requirements on employment terms and conditions stated in a nationwide collective labour agreement considered to be representative in the sector. An employee posted to Finland is entitled to the salary determined by a universally valid Finnish collective labour agreement for the sector. According to the Employment Contracts Act, the employer must provide the employee with a description of the most essential terms and conditions of employment if they are not indicated on a written employment contract. An employment contract can be made for a specified period or until further notice. In an employment contract the employee personally commits to working for the employer under its management and supervision against wages or other compensation. An employment contract can be made for a specified period or until further notice. An employment contract for a specified period requires a justified reason. An employment contract can be made in writing, orally or electronically. There are no requirements regarding the form of an employment contract. However, it is recommended that contracts be made in writing, indicating all the terms and conditions. ACCIDENT AND PENSION INSURANCE The employer has a statutory obligation to take out accident and pension insurance for the employees; the employees are also provided with group life assurance and unemployment insurance in connection with the statutory accident insurance. The employer must arrange for statutory occupational health care. TAX AND SOCIAL SECURITY The employer is responsible for paying any withheld taxes and social security contributions to the tax authorities, and for submitting annual notifications to the tax authorities, and the pension and accident insurance companies, with information on the wages and salaries paid to employees. Finland Fact Book – A guide to doing cost-effective business in Finland 31
  32. 32. TERMS AND CONDITIONS OF EMPLOYMENT Working hours. Regular working hours are usually at most 8 daily hours and 40 weekly hours. In a two week period the working hours are not more than 80 hours and in a three week period 120 hours. The weekly hours may also be arranged in longer periods during which the average weekly hours do not exceed 40 hours. Working hours may be arranged by law or collective agreements alternatively, for example in two or three week periods. Holidays. An employee has a right to receive pay also for the time he/she is on annual holiday. Normally holiday leave accumulates 2 days (when employment has lasted less than 1 year) or 2 1/2 days for each holiday credit month. Normal wages are paid for the time an employee is on holiday. Sick pay. According to the law, an employee who is unable to work due to an illness or an accident is entitled to paid sick leave. Wages are paid for the day when the illness started (if it had been a working day for the employee) and for the working days. If the employment relationship at the start of the disability has lasted for at least one month, the employee will be paid full wages for the said period. If the employ- ment relationship has lasted for a period shorter than one month, half of the wages will be paid for the same period. Parental leave. Parental leave lasts 158 working days taken during pregnancy or in the period following birth. It is extended by 60 working days per child in the case of multiple births. During the parental leave, Kela (The Social Insurance Institution of Finland) pays parental allowance. Both parents can take the parental leave in up to two separate periods of at least 12 working days each. In case of premature birth, Kela pays maternity allowance starting from the day following the birth. The parental allowance period of the parent taking the parental leave is extended by as many days as the maternity allowance was brought forward. Employer costs to business Statutory contributions by employers amount to about 23.5 % of the gross salary payable in 2012. They include: • Employers’ health insurance (social security) contribution • Unemployment insurance • Group life insurance premium • 32 Earnings-related pension (TyEL) insurance contribution • Occupational accident insurance Finland Fact Book – A guide to doing cost-effective business in Finland
  33. 33. A typical breakdown of the monthly payments made by the employer for an employee with a salary of 3100 EUR in 2013. Salary 3100.00 Employers’ health insurance contribution (2.04 %) 63.24 Unemployment insurance (0.8–3.2 %, 2.27 % on average) 70.37 Earnings-related pension insurance contribution (17.35 % on av. for employer) 537.85 Group life insurance premium (0.07 % on average) 2.70 Occupational accident insurance (average 0.9 %) 27.90 Total employer costs € 3802.06 Average salaries in the private sector in 2011, EUR, full-time employees (Statistics Finland 2013) All employees Directors and managers Senior specialists Specialists Office and customer service staff Service and sales staff Agricultural and forestry workers Construction, repair and manufacturing workers Process and transport workers Other workers Profession not known 3 328 5 793 4 150 3 310 2 636 2 326 2 210 2 715 2 713 2 160 2 718 Total labour costs per employee in private sector in 2008, EUR (Statistics Finland 2012) Secondary production 50,200 Services 43,000 Private sector total 46,000 Compared to many OECD countries, Finland is a very cost-efficient location for running a business. For example, the capital city Helsinki has a wide array of high quality office premises available at competitive costs. The total costs of employing highly educated professionals in Helsinki are lower than in most other European locations. Helsinki’s compact size and reliable transport system help companies to save money in transportation costs. Finland’s electricity prices are among the lowest in Europe. Sources: Statistics Finland, Helsinki Business Hub, Eurostat Finland Fact Book – A guide to doing cost-effective business in Finland 33
  34. 34. Visas, Work and Residence Permits People from countries outside the EU may stay in Finland as tourists for three months without a permit. If they wish to work in Finland, they need to apply for a residence permit, even if the period of stay is shorter than three months. EEA and Swiss citizens, their spouses and children under 21 years of age or dependent on their parents’ care do not need a work permit. Permits for entrepreneurs and employees. The permits required depend on whether the person is from or residing in another Nordic country, an EU country or outside the EU. The notifications and permits required can include registering the right to reside in Finland, the residence permits of the entrepreneur or employees, and registration in the Population Register. Persons residing outside the European Economic Area (EEA) may also need a permit from the National Board of Patents and Registration to serve in managerial and other duties of responsibility in businesses. VISA APPLICATIONS Applying for a visa to the Schengen area and application form. Foreign nationals who need an entry visa are requested to apply at the nearest Finnish mission. In countries where Finland does not have a mission, another Schengen country can represent Finland in visa matters. The Schengen member states are Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland. These states have jointly agreed about the rules concerning the movement of third-country nationals in their territories and decided which countries’ citizens are required to present a visa. RESIDENCE PERMITS Residence permits for citizens of EU and EEA countries. Citizens of the Nordic countries (Sweden, Norway, Denmark and Iceland) may freely enter Finland and reside in the country without a residence permit. They can also take up paid employment without a residence permit for an employed person. EU citizens and citizens of Iceland, Liechtenstein, Norway and Switzerland have the right to enter, reside, study, seek work, or practice a profession in Finland for three months without a residence permit. If the stay lasts longer than that, they must register their right to reside in Finland at a police department. Residence permits for citizens of non-EU/EEA countries. Citizens from non-EU/EEA countries should apply for a residence permit first. Everyone applying for a residence permit must fill in a separate form. This applies to all children too. The application is subject to a fee, which will be charged for children too, even if they are entered in the passport or other travel document of a parent or guardian. Application forms. The residence permit application forms for employment (OLE_ TY1), for person employed as a special expert (OLE_TY2) and for self-employment 34 Finland Fact Book – A guide to doing cost-effective business in Finland
  35. 35. (OLE_EHA) and a list of required attachments are available on the Finnish Immigration web site and at Finnish embassies. The form may be submitted at a Finnish embassy or to the local police in Finland. In order for a residence permit to be granted, the applicant must have a valid passport or other approved travel document. In Finland, the residence permit with photo is in Finnish or Swedish, depending on which language the applicant chooses on the application form. There is no provision for residence permits in English, since EU legislation requires that national languages be used in each EU Member State. First residence permit for employed persons or self-employed persons costs 500 EUR in 2013. More information in English on acquiring residence permits at the Finnish Immigration Service: WORK PERMITS Employment of a foreign national in Finland requires a residence permit, which is applied for before arriving in Finland from a Finnish mission abroad. Private entrepreneurship or the exercise of a profession in Finland requires a separate residence permit intended for entrepreneurs. Residence permits for employees or entrepreneurs are not required for citizens of EU-member states or citizens of Iceland, Liechtenstein, Norway and Switzerland. For EU and EEA citizens. EU citizens and citizens of Iceland, Liechtenstein, Norway and Switzerland can freely work in Finland if the work lasts for a maximum of three months. After that, they must register their right to reside in Finland, but they do not need a special residence permit. For non-EU citizens. Foreign employees who are non-EU citizens and equivalent persons need a residence permit for an employed person if they intend to work in Finland. An alien who has entered the country either with a visa or visa-free is not allowed to engage in remunerated employment in Finland but, rather, has to apply for a residence permit. A residence permit can be granted on the basis of either temporary work or work of a continuous nature. In granting the permit, the needs of the labour market are taken into consideration. The aim of the residence permit certification is to support those who are on the More information in English at Enter- employment market to gain employment. Thus, the availability of work force is also prise Finland: supported. • National Board of Patents and Registration: • Finnish Granting a residence permit for an employed person requires that the foreigner’s Immigration Service: means of support be guaranteed. The employment office will estimate both the Ministry of Foreign Affairs labour political requirements and the sufficiency of the means of support. Finland Fact Book – A guide to doing cost-effective business in Finland 35
  36. 36. Legal Framework – Corporate Law Finland has a civil law system where EC law is directly applicable and takes precedence over national legislation. There are several important legal considerations to take into account when establishing a business in Finland. Foreign investment. There are no general restrictions on foreign investment, although authorization is required in certain regulated sectors such as banking. There are no exchange controls or currency regulations. Government subsidies are available in certain areas and usually take the form of start-up grants, subsidized loans, stateguaranteed financing and freight subsidies. Directors’ liability. The managing director and members of the board and supervisory board are liable to compensate the company or the shareholders for damages caused deliberately or through negligence; and third parties for any breaches of the articles or the Companies Act. Parent company liability. A parent company is not generally liable for its subsidiaries’ debts, unless it has provided a guarantee for those liabilities. Reporting requirements. Companies must submit their annual accounts to the Trade Register. Public companies must prepare and publish interim reports at least four times a year. There must be statutory audit in Finland of a Finnish branch office, if the company’s annual accounts are not being compiled, audited or made public in the manner corresponding to the current EU rules. Tax residency. Finnish or foreign individuals are treated as a Finnish resident if they either have their main abode and home in Finland or stay in Finland for more than six consecutive months. Patents are protected by registration with the National Board of Patents and Registration. Protection generally lasts for 20 years. Employer obligations. If a foreign company has a permanent establishment for the purposes of income taxation, its role as an employer in Finland is no different from that of a domestic employer. Therefore, the company should become registered as an employer, withhold money from the wages paid out, file monthly tax returns and annual employer payroll reports. BJL Bergmann Attorneys at Law Employment regulations. The most relevant statutes regulating employment relationships in Finland are the Employment Contracts Act 2001 (ECA 2001) and Co-determination within Enterprises Act 1978 (CEA 1978). Other generally relevant statutes applicable to most employment relationships are the Working Hours Act 1996, Annual Leave Act 2005 and Safety at Work Act 2002. In general, all employers are subject to labour laws, irrespective of their size and line of business. Finnish labour laws are generally applicable to all employment relationships in Finland, including foreign employees working in Finland and Finnish employees seconded to work abroad. 36 Finland Fact Book – A guide to doing cost-effective business in Finland More information in English at the Finnish Tax Administration: • National Board of Patents and Registration: Text: Peter Jaspers, Attorney at Law,
  37. 37. Taxation Taxes in Finland are levied by the central government, local municipalities and the church. For businesses, the main taxes are corporation tax (profit tax) and real estate tax. Other taxes consist of an assets transfer tax (formerly stamp duty) and a withholding tax. The employers are also required to make a social security contribution. Individuals have to pay a progressive income tax from their salaries. Foreign personnel working in Finland for longer than a six-month period are also required to pay Finnish income tax. This guarantees that all residents continue to receive top-level public health care, free schooling for children, and other valuable public services. Private individuals’ income tax has come closer to the European average level in recent years in Finland. Examples of tax rates in Finland in 2012 Tax Corporate income tax Value added tax (VAT) Transfer tax, real estate Transfer tax for shares in housing companies, mutual real estate companies and other similar companies Transfer tax on transactions with corporate stock of business companies Excise tax Sub classes Tax rate 24.5% 23% • Standard • Foodstuff and animal feed • Restaurant and catering services 14% • Books, medicines, use of sporting facilities, passenger transportation, accommodation and the right to use harbour, admission to cultural services and amusement parks and some other items. 10% 4% 2% 1.6% Varies, usually not a percentage CORPORATION INCOME TAX Corporation (or corporate) tax is an income tax collected from limited companies and other corporations. The tax is levied of the taxable income of a corporation. The taxable income is calculated by subtracting the deductible expenses of the corporation from its taxable income. The tax rate is 24.5 % in 2013. It will be decreased to 20 % in 2014. Finland Fact Book – A guide to doing cost-effective business in Finland 37
  38. 38. VALUE ADDED TAX (VAT) VAT is an indirect tax assessed as a percentage of the value of all goods and services, unless specifically exempted. It is a consumption tax paid by the end consumer. VAT-registered businesses can deduct VAT paid on purchases for business activities from their VAT liability. The Finnish acronym for VAT is ALV. TRANSFER TAX Transfer tax is payable on the transfer of the ownership of securities, shares of housing companies (or similar companies), or real estate, and it is paid on the purchase price. The tax is usually paid by the buyer or other transferee. EXCISE TAX Excise duty is levied to provide for general government finances. The collection of excise duty can also contribute to health and social affairs, the environment, energy, transportation, or economic policy. Excise duty is levied on alcohol and alcoholic beverages, tobacco products, electricity, natural gas, hard coal, liquid fuels (e.g. petrol/gasoline) and diesel, soft drinks, sweets, ice cream, beverage packages and tall oil. Waste tax and oil waste duty are also comparable to excise duty. Excise duty is levied on all products that are subject to it, whether domestically produced, imported from a member state of the EU, or imported from a country outside the EU. Excise taxation is implemented and controlled by the Finnish Customs. PRIVATE INCOME TAX The state levies a progressive tax on earnings. The marginal tax rates vary from 6.5 % (taxable income between 16,100 and 23,900 EUR annually) to 31.75 % (taxable income at over 100,000 EUR annually) in 2013. YLE-tax is meant to finance the operations of the National broadcasting company YLE. It applies to every adult person. The tax rate is 0.68 % of annual income, but the tax has been capped at 140 EUR. A tax sum worth less than 50 EUR does not need to be paid. Finnish municipalities levy a tax on earnings as well. In Helsinki the municipal tax rate is 18.50 % in 2013. The Evangelic-Lutheran Church and the Orthodox Church have the right to tax their members. The church tax rate is flat. In the Lutheran Church the rate varies from 1 to 2 per cent depending on the parish. In the Orthodox Church the rate varies from 1.6 to 2.2 per cent, depending on the parish. 38 Finland Fact Book – A guide to doing cost-effective business in Finland
  39. 39. EMPLOYEES STAYING IN FINLAND FOR MAX 6 MONTHS MEETING FINNS IN BUSINESS If duration of stay is six months or a shorter time, employee is considered as a non-resident. This means that the payer have to withhold 35 % from his/her pay To succeed as an entrepreneur in as a final tax at source (Finnish: lähdevero; Swedish: källskatt). The base of this tax Finland, it is important to be familiar not only includes cash wages but also any fringe benefits given to the employee. with the norms, attitudes and customs However, there is an upfront deduction to be made from the gross amount before of Finnish business culture. There are the computation of tax. The employee has to have a tax card in which the deduction many characteristics of western, is specified. The amount of the deduction is 510 EUR per month, and it should be individual-based culture in Finnish subtracted from the sum total of gross compensation, which includes cash wages society. Finns endeavor to make and fringe benefits. If the pay period is shorter than one month, the deduction sensible use of their time. They follow amount is 17 EUR per day. timetables and other plans faithfully and expect the same from others, Payroll taxes including the employer’s social security and health insurance contribu- expecting well-defined targets and tions are to be computed and paid using the sum total as the base. The 510 EUR processes, authority and responsibili- per month deduction is subtracted afterwards. No deduction can be made on a fee ties. Finns are careful and gather for attending a board meeting etc. The payer cannot implement the deduction (or background information in advance, other tax relief) unless the employee has shown a valid tax card intended for non- but they make decisions quickly and residents, whose receipts of wages are subject to tax at source. The local tax office thoroughly. Changing a decision is issues a tax card on request. difficult without well-founded reasons. EMPLOYEES STAYING IN FINLAND FOR LONGER THAN 6 MONTHS distributed with a strong streak of If duration of stay is longer than six months, is the employee considered a Finnish independence. Finns dislike being too tax resident. This means that he/she is taxed in Finland, and the progressive scale is closely supervised. Personal dignity is implemented in the same way as in the case of a Finnish permanent resident. Payers highly valued. Power and responsibility are flexibly are obligated to withhold tax and pay it forward to the tax office. The payer must follow the instructions printed in the tax card. If the employee fails to show a tax card The Finnish way of thinking and or if the employee does not have a prepayment registration, the rate of withholding working is very consistent. As a result, will be 60%. Unless fees paid to athletes or sportsmen are involved, wages will also they sometimes shun unfamiliar be subject to the employer’s social security contribution. However, this obligation will modes of operation. In Finnish society, be waived if the employee has the posted employee status, and the E 101 certificate, all are treated equally and the use of A1 certificate or a Kela-issued document is shown. In this case, the employee is not first names universal – but modesty is covered by the Finnish social insurance system. appreciated. Finns like to solve conflicts by negotiation, looking for an More information in English at: • outcome that is fair for all. In negotiations, don’t always expect immediate feedback on your comments, and enjoy taking breaks from the conversation. Finns greatly value a genuine interest in Finnish culture and enjoy discovering cultural differences. A healthy sense of humour is an asset, and if you have the opportunity to take a sauna, try it out, your Finnish hosts will be mightily impressed. Finland Fact Book – A guide to doing cost-effective business in Finland 39
  40. 40. Business opportunities and consulting services for international companies Invest in Finland, Finpro ry Porkkalankatu 1 FI-00181 Helsinki, Finland tel: +358 204 695 555 fax: +358 204 695 201